SB781 - Small business.

Amended IN Assembly July 14, 2025 Amended IN Senate May 01, 2025 Amended IN Senate March 26, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 781 Introduced by Senator Reyes (Coauthors: Assembly Members Nguyen and Schiavo) Gipson, Nguyen, Patel, Schiavo, and Solache) February 21, 2025 An act to amend Sections 12098.3 and 12100.63 of the Government Code, and to add Chapter 2.7 (commencing with Section 22060) to Part 3 of Division 2 of the Public Contract Code, relating to small business. LEGISLATIVE COUNSEL'S DIGEST SB 781, as amended, Reyes. Small business. Existing law establishes the Office of Small Business Advocate within the Governor’s Office of Business and Economic Development, led by the Small Business Advocate, and sets forth its powers and duties relating to advocacy on behalf of small business and providing small businesses with the information they need to survive in the marketplace. Existing law requires the advocate to, among other duties, collaborate with the Office of Small Business and Disabled Veteran Business Enterprise Services in their activities under the Small Business Procurement and Contract Act, including promoting small business certification. This bill would require the advocate to also collaborate with local agencies on the development and implementation of local strategies to increase small business participation in local procurement opportunities, as specified. In this connection, the bill would authorize a local agency, as defined, to establish a Small Business Utilization Program (SBUP) to increase small businesses’ participation in local agency procurement opportunities. This bill would require an SBUP, to facilitate the participation of small businesses in the provision of goods, information technology, and services to the local agency, to establish a small business certification process. As part of this process, the bill would require the SBUP, to the extent feasible, to include all of specified criteria, including, among other things, a minimum goal of 25% procurement participation for small businesses certification. The bill would authorize a local agency that establishes an SBUP to engage in specified activities to facilitate contract awards to small businesses. This bill would authorize a local agency to submit information on its small business procurement participation to the Office of Small Business Advocate, including progress toward meeting utilization goals. The bill would require the Office of Small Business Advocate, subject to funding being available, and upon appropriation by the Legislature for these purposes, to issue its first data call to local agencies by November 15, 2027, and every year thereafter, as specified. The bill would require the Office of Small Business Advocate to prepare an annual report that may contain, among other things, information received from the data call and to post the report on its internet website within 6 months after each data call. The bill would include related legislative findings. Existing law creates the California Small Business Technical Assistance Program within the California Office of the Small Business Advocate, under the direct authority of the Small Business Advocate. Existing law requires the office to administer the program to provide grants to expand the capacity of small business development technical assistance centers in California, California that are administered by and primarily funded by federal agencies and other nonprofit small business technical assistance centers, as specified. Existing law sets forth the criteria that an applicant must meet to be eligible to participate in the program. Existing law authorizes specified state funding provided pursuant to these provisions to be used for outreach efforts. This bill would, for grants made in fiscal years 2025–26 through 2027–28, inclusive, establish specified exceptions and modifications to the eligibility criteria. would remove provisions that require an applicant to provide a plan of action and commitment to fully draw down all specified federal funds available to it, that authorize the office to require an applicant to provide details relating to the source and amount of nonstate funds, and that require an applicant to demonstrate the ability to fully draw down substantially all federal and private funds available to it in order to be eligible to participate in the program. The bill would authorize an applicant to utilize federal and private funding contracts, as specified. The bill would authorize up to 25% of specified state funding awarded pursuant to these provisions to be used for outreach and limit the awarded funds that may be used for direct program administration expenses to 15%. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 12098.3 of the Government Code is amended to read: 12098.3. (a) The Small Business Advocate shall be appointed by, and shall serve at the pleasure of, the Governor. (b) The Governor shall appoint the employees who are needed to accomplish the purposes of this article. (c) The duties and functions of the advocate shall include all of the following: (1) Serve as the principal advocate in the state on behalf of small businesses, including, but not limited to, advisory participation in the consideration of all legislation and administrative regulations that affect small businesses, and advocacy on state policy and programs related to small businesses. (2) Represent the views and interests of small businesses before other state agencies whose policies and activities may affect small business. (3) Enlist the cooperation and assistance of public and private agencies, businesses, and other organizations in disseminating information about the programs and services provided by state government that are of benefit to small businesses, and information on how small businesses can participate in, or make use of, those programs and services. (4) Consult with experts and authorities in the fields of small business investment, venture capital investment, and commercial banking and other comparable financial institutions involved in the financing of business, and with individuals with regulatory, legal, economic, or financial expertise, including members of the academic community, and individuals who generally represent the public interest. (5) Seek the assistance and cooperation of all state agencies and departments providing services to, or affecting, small business, including the small business liaison designated pursuant to Section 11148.5, to ensure coordination of state efforts. The advocate shall fulfill this duty by, among other activities, maintaining, publicizing, and distributing an annual list of persons serving as small business liaisons throughout the state. (6) Receive and respond to complaints from small businesses concerning the actions of state agencies and the operative effects of state laws and regulations adversely affecting those businesses. (7) Counsel small businesses on how to resolve questions and problems concerning the relationship of small business to state government. (8) Collaborate with the Office of Small Business and Disabled Veteran Business Enterprise Services in their activities under the Small Business Procurement and Contract Act (Chapter 6.5 (commencing with Section 14835) of Part 5.5), including, but not limited to, promoting small business certification and undertaking reasonable means to assist state agencies in improving small business participation. Among other activities, the advocate shall maintain, publicize, and distribute an annual list of persons serving as a small business advocate, designated pursuant to Section 14846, throughout state government. (9) Collaborate with the California Disabled Veteran Enterprise Program Advocate, appointed pursuant to Section 999.11 of the Military and Veterans Code, regarding the implementation of the California Disabled Veteran Business Enterprise Program (Article 6 (commencing with Section 999) of Chapter 6 of Division 4 of the Military and Veterans Code), including, but not limited to, promoting disabled veteran business enterprise certification to veteran entrepreneurs and veteran-owned small businesses and undertaking reasonable means to assist state agencies in improving small business and disabled business enterprise procurement participation. The advocate shall fulfill this duty by, among other activities, publicizing the annual list of persons serving as a Disabled Veteran Business Enterprise Program Advocate, designated pursuant to Section 999.12 of the Military and Veterans Code, throughout the state. (10) Collaborate with local agencies on the development and implementation of local strategies to increase small business participation in local procurement opportunities, including facilitating discussions and sharing examples, when known and available, of small business utilization strategies, technical assistance and outreach models, reciprocity agreements, and structures of preferences and other incentives. SEC. 2. Section 12100.63 of the Government Code is amended to read: 12100.63. (a) The California Small Business Technical Assistance Program is hereby created within the California Office of the Small Business Advocate. (b) The program shall be under the direct authority of the Small Business Advocate. (c) The purpose of the program is to assist small businesses through free or low-cost one-on-one consulting and low-cost training by entering into grant agreements with one or more small business technical assistance centers. (d) In implementing the program, the office shall consult with local, regional, federal, and other state public and private entities that share a similar mission to support the needs of small businesses in California. (e) An applicant pursuant to this article shall be a small business technical assistance center, including a regional or statewide network, operating as a group or as an individual center. (1) A small business technical assistance center operating as a group consisting of centers organized under a coordinating administrative or fiscal entity shall apply by submitting a single consolidated application to the office. (2) A small business technical assistance center operating as an individual center shall apply by submitting a single application for that center to the office. (f) The office shall administer the program to provide grants to expand the capacity of small business development technical assistance centers in California, administered by and primarily funded by federal agencies, but shall also include other nonprofit small business technical assistance centers, that provide one-on-one confidential consulting and training to small businesses and entrepreneurs in this state. Except as modified by subdivision (l), an applicant shall be eligible to participate in the program if the office determines that the applicant meets all of the following criteria: (1) At the time of applying for funds, the applicant has an active contract with a federal funding partner to administer a program in this state, or has received a letter of intent from a federal funding partner to administer a federal small business technical assistance center program in this state within the next fiscal year. Alternatively, if the applicant is not a federally contracted small business technical assistance center, the applicant shall document a private funding source with similar intent and meet the criteria defined in subdivision (s) of Section 12100.62. (2) (A) The applicant provided a plan of action and commitment to fully draw down all of the federal funds available using local cash match and state funds not described in Section 12100.65 during the duration of the award period. Alternatively, if the applicant is not a federally contracted small business technical assistance center, the applicant shall present a plan of action for drawing down any match required by those private funding sources using local cash match outside of state funds not described in Section 12100.65 during the award period. The office may request that the applicant provide details relating to the source and amount of these nonstate local match funds. (B) If the applicant is a new small business technical assistance center, the applicant has demonstrated the ability to fully draw down substantially all federal or private funds available to it. (3) The requested funding amount does not exceed the total federal award specified in the contract with the federal funding partner contract, or the private funding sources specified, but in any event is no less than twenty-five thousand dollars ($25,000). (4) The applicant seeks funding for one or more years, but no more than five years in duration. (5) The grant agreements authorized by this article are not subject to the model contract provisions developed pursuant to Chapter 14.27 (commencing with Section 67325) of Part 40 of Division 5 of Title 3 of the Education Code. (6) The applicant has a fiscal agent that is able to receive nonfederal funds. (g) The office shall issue a request for proposal for grants under the program, which may contain the following information: (1) The eligibility requirements described in subdivision (e). (2) The available funding range. (3) Funding instruments. (4) The local cash match requirement described in subdivision (f). (5) Operational capacity. (6) The duration of the program. (7) The start date of the program. (8) Narrative requirements. (9) Reporting requirements. (10) Required attachments. (11) Submission requirements. (12) Application evaluation criteria. (13) An announcement of an awards timeline. (h) (1) The office shall evaluate applications received based on the following factors: (A) The proposed use of the requested funding, including the specificity, measurability, and ability of the applicant to document and achieve the goals and objectives identified in its application. (B) The proposed management strategy of the applicant to achieve its goals and objectives identified in its application. (C) The applicant’s ability to complement and leverage the work of other local, state, federal, nonprofit, or private business technical assistance resource providers. (D) The applicant’s historical performance with federal funding partner contracts or private funding sources and the strength of its fiscal controls. (2) The office shall prioritize funding for applications that best meet the factors listed in paragraph (1) and give preference to applications that propose new or enhanced services to underserved business groups, including women, minority, and veteran-owned businesses, and businesses in low-wealth, rural, and disaster-impacted communities included in a state or federal emergency declaration or proclamation. (i) State funds provid [Text truncated for display. Full text available on Congress.gov.]